Is Buying Off-the-Plan Worth It? Pros, Cons and Risks Explained

Written by Bill, BK Home Broker — August 13, 2026

Buying off-the-plan means purchasing a property before it's built, usually with a 10% deposit now and the balance due at settlement. It can offer price growth, early-bird discounts, and delayed stamp duty — but it also carries builder-default risk, finance risk, and settlement-glut risk. Here's what to weigh up before you sign a contract.

What Does "Buying Off-the-Plan" Mean?

Off-the-plan buying is when you purchase a house, townhouse, or apartment based on plans and specifications, before construction is complete. Most projects take 1–2 years to build, and buyers typically pay a 10% deposit at exchange, with the remaining 90% due at settlement.

Pros of Buying Off-the-Plan

1. You Get More Time to Save Your Deposit

Because settlement is 1–2 years away, you only need 10% upfront, giving you time to save the rest before the loan is due.

Example:

• $500,000 property → $50,000 deposit now

• Save another $50,000 before completion

• Result: 20% deposit ready at settlement

Why 20% matters: Lenders have tightened Loan-to-Value Ratios (LVRs), and most now require investors to hold at least 20% equity to avoid Lenders Mortgage Insurance (LMI).

Tip: If you'd rather keep cash free for other investments, a deposit bond can substitute for cash, but you'll need conditional loan approval to qualify.

2. You Can Benefit from Price Growth

You lock in today's price. If property values rise during the construction period, that growth is yours.

Example:

• Contract price: $500,000 (10% deposit = $50,000)

• Completion value: $550,000

• Result: a $50,000 gain on a $50,000 deposit — a 100% return on capital invested

3. Early-Bird Discounts Are Common

Developers need pre-sales to secure project finance, which puts negotiating leverage in the buyer's hands.

• Early buyers typically access the lowest release prices

• Buyers who bring comparable sales data can often negotiate further

4. Stamp Duty Can Be Delayed (Owner-Occupiers Only)

Owner-occupiers buying off-the-plan can delay stamp duty payment for up to 15 months, or until completion.

⚠️ This concession does not apply to investors. Investors must still pay stamp duty within the standard 3-month window.

Cons of Buying Off-the-Plan

1. Builder Bankruptcy Risk

If the builder or developer becomes insolvent before completion, the project can stall or collapse entirely.

What's at risk:

• 1–2 years of waiting, with no guarantee of completion

• In the worst cases, loss of your deposit

How to protect yourself:

• Check the contract for a refund clause before signing

• Buy from established, well-capitalised developers

• Note that banks are also more willing to finance projects from reputable builders — this reduces your settlement risk too

2. Finance Risk at Settlement

The developer doesn't assess your finances at the time of sale — but your bank will, at settlement. If property values soften or the bank's valuation comes in below your contract price, you may face a shortfall.

Example:

• Contract price: $500,000

• Bank valuation at settlement: $450,000

• Your 10% deposit no longer covers the gap — you may need to find extra cash or risk losing your deposit and facing legal action for failing to settle

Tip: Studios under 40m² are harder to finance, as banks view them as higher risk. Aim for at least a 30% deposit if buying a small studio off-the-plan.

3. Settlement Glut

When a large development completes, dozens or hundreds of units can hit the market simultaneously.

• This oversupply can soften resale prices if you try to sell immediately

• Holding the property and riding out the settlement wave is usually the stronger strategy

Off-the-Plan: Pros vs Cons at a Glance

	Pros	Cons
Deposit	Only 10% needed upfront, time to save the rest	Bank valuation at settlement may fall short
Price	Lock in today's price, benefit from growth	Settlement glut can soften resale prices
Cost	Early-bird discounts, negotiable pricing	—
Tax	Stamp duty deferred up to 15 months (owner-occupiers)	Investors get no stamp duty concession
Risk	—	Builder insolvency can delay or collapse the project

FAQs About Buying Off-the-Plan

Is buying off-the-plan a good investment?

It can be, if the developer is reputable and you budget for a potential valuation shortfall at settlement. The upside is price growth and a smaller upfront deposit; the risk is builder default or a lower-than-expected bank valuation.

How much deposit do I need to buy off-the-plan?

Most contracts require a 10% deposit at exchange. Banks generally want buyers to hold 20% equity by settlement to avoid Lenders Mortgage Insurance — smaller units under 40m² often require 30%.

Do you pay stamp duty on an off-the-plan property?

Owner-occupiers can typically defer stamp duty for up to 15 months or until completion. Investors do not receive this concession and must pay within the standard 3-month period.

What happens if a builder goes bankrupt during an off-the-plan project?

The project can stall or collapse, and in the worst cases buyers lose their deposit. Always check the contract for a refund clause and buy from developers with a strong completion track record.

What is a deposit bond and when should I use one?

A deposit bond lets you secure a property without paying the deposit in cash, keeping your funds free for other purposes. It requires conditional loan approval to arrange.

Thinking about an off-the-plan house-and-land package or townhouse in Queensland or Victoria?

Talk to BK Home Broker about current releases and developer track records in your target area.